Charitable Giving in Estate PlanningA well-considered estate plan can establish a long-lasting legacy. For many Floridians, this means bequeathing gifts to children, friends, and family. However, estate assets can also be leveraged for the greater good, used to uplift communities and fund preferred charities.

The Advantages of Charitable Giving

Philanthropists are often motivated by a strong sense of personal responsibility, whether to a particular church, community, or social cause. A charitable estate plan can, in a great many ways, fulfill a deep-seated desire to leave the world a better place.

However, the benefits of charitable giving extend far beyond a grantor’s personal sentiments. The federal government, in fact, actively encourages philanthropy by providing critical tax breaks to Floridians willing to share their life’s work with individuals and organizations in need of assistance. A charitable gift could:

  • Provide an opportunity to establish a generous legacy
  • Alleviate your personal tax burden
  • Reduce federal estate taxes for designated beneficiaries

Including a charity, or charities, in your estate plan does not have to be difficult. However, simply listing a preferred organization in your will may not be the best way to establish a legacy.

How Estate Planning Can Help Establish a Generous Legacy

Florida law affords Sunshine State residents the right to make informed decisions about the distribution of their estate assets. You could include a charity in your estate plan by:

Bequeathing Lifetime Gifts

If you choose to donate to charity while you are still alive, you may be able to avail significant income tax deductions.

However, deductions are limited and require careful planning, and you may need to contact an attorney and tax professional to ensure that you are making the best use of your assets.

Leaving Money to a Charity in Your Florida Will

A last will and testament is a legal document that specifies how you would like your estate assets to be distributed upon your death. Simply designating a charity as a beneficiary to your will is among the easiest ways to establish a charitable legacy.

While writing a will is less time-consuming than establishing a charitable lead or remainder trust, any assets bequeathed through a Florida will are subject to probate. During probate, any interested parties—including disinherited beneficiaries, and even creditors—could contest the terms of your will. Even if a will contest is unsuccessful, it could deplete your estate’s resources, leaving little for your intended heirs. Working with a good attorney will help reduce or eliminate the possibility of litigation, and you may want to consider creating a revocable living trust to avoid probate.

Contributing a Charitable Rollover in Your Individual Retirement Account

A charitable IRA rollover, or qualified charitable distribution, allows certain donors to exclude retirement investment assets from their taxable income. These rollovers can also help retirees reach their required minimum distribution amount. 

Establishing a Charitable Trust

A charity can be the beneficiary of a revocable living trust or an irrevocable trust. Trusts offer several critical advantages, as they can benefit heirs and charities alike. The two most common types of charity-specific trusts include:

  • Charitable remainder trusts. A charitable remainder trust, or CRT, makes distributions to two sets of beneficiaries: a lifetime income beneficiary, which could be yourself or a family member, and the named charity, which receives the trust’s remaining principal upon the grantor’s death. Charitable remainder trusts are not subject to capital gains taxes or estate taxes, and can be used to claim income tax deductions while the settlor is still alive.
  • Charitable lead trusts. Charitable lead trusts, or CLTs, provide similar tax benefits to CRTs. However, charitable lead trusts provide periodic income payments to the charity, with the remaining principal bequeathed to the grantor’s heirs after a set period of time or upon their death. A charitable lead trust can be used to support a philanthropic organization while ensuring that a surviving spouse, children, or other loved ones receive a significant inheritance.
D. Rep DeLoach III
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Estate Planning and Board Certified Elder Law Attorney